Cisco Calls Out HP For Suing Former Employees Who Leave HP To Work For Cisco

from the sullying-the-hp-brand dept

We've written, in great detail, about the research that shows that the ability for employees to switch jobs freely almost certainly contributed massively to the huge success of Silicon Valley. Multiple studies, looking at multiple different factors, have shown that a simple legal issue -- the fact that non-compete agreements are unenforceable in California -- was the key driving factor in Silicon Valley's success. Sure, other things were important: good universities, investors, etc. But other areas had that too. What set Silicon Valley apart was the fact that employees switch jobs much more frequently.

As for why that has such a massive impact on innovation and economic growth, it has to do with the sharing of ideas. While traditional economic theory might suggest companies are better off hoarding information on new products, that's not true in many cases. Take, for example, an emerging market where multiple players are on the verge of key breakthroughs -- but the market won't really emerge until that breakthrough is complete. What studies have found is that the more minds thinking about a problem and cross-pollinating ideas, the faster it is that the necessary breakthrough can happen. Now, companies may not work directly together on solving the challenge, but when employees shift regularly between companies they act to pollinate the ideas from one organization to another, helping those organizations reach the breakthrough point sooner, creating those large new markets. This isn't a bad thing. Speeding up the process of innovation and creating large new markets is a non-zero sum game, so the fact that an employee leaves can actually help spur a huge market that the employee's former company can take advantage of too. At the same time, it allows companies, who might be upset about losing certain employees, to similarly hire people away from other competitors.

So, it always strikes me as a bit strange when companies get so worked up about an employee leaving to join a competitor -- especially in California. However, Cisco General Counsel Mark Chandler is directly calling out HP for a series of lawsuits against employees who left HP (a company clearly in turmoil) to go to Cisco. Chandler highlights the fact that noncompetes are unenforceable in CA, but notes that (even though both companies are headquartered not far from each other in California), HP has used the fact that it has locations elsewhere to file lawsuits against former employees three times. And the stories suggest that HP is really going overboard in these efforts:

In the first of the three cases, HP was so persistent in the litigation and so threatening, that the individual, who had retired from HP months before even talking to Cisco, withdrew. There seemed to be little concern with the stress that a big company turning its legal guns on an individual can cause. In another case, an employee who worked in HP’s financial services group was sued to block her from working in Cisco’s customer finance group, even though there was no argument whatsoever that relevant intellectual property at stake. She persisted and HP relented. In the most recent case, just last week, the employee, who’d given HP over two decades of loyal service, had moved to California before starting work at Cisco. He asked a California court to declare that he was protected by California law and that HP could therefore not enforce its non-compete. A court hearing was scheduled in California, we notified HP and HP retained counsel. Cisco also reached out to senior legal staff at HP to try lay out some voluntary steps to avoid further litigation and to give further reassurance that the employee wouldn’t even inadvertently leverage any HP confidential information.

HP’s reply was to file an action in Texas against the employee and schedule an “emergency” hearing to try to enjoin the employ from working with Cisco, seeking to have a judge issue the injunction with no notice and no opportunity for the employee to be represented. Fortunately, an eagle-eyed Texas lawyer working for the employee saw the filing appear on line and showed up in court. Given that the matter was already in front of a California court, with HP fully represented, in a hearing scheduled for two hours later, the judge in Texas was not impressed by HP’s effort to get her to act without a hearing. She refused to proceed. And the California judge issued an order allowing the employee to begin his new career at Cisco.

There's no way to look at this and not wonder what is going on at HP. The company is flailing. It's been firing CEOs left and right -- and paying them ridiculous sums for failing in the process. Why not just spend some of the money that's being wasted in these silly and damaging lawsuits to actually innovate? In his post, Chandler also notes that HP has been on the other end of similar fights, which makes this even more bizarre. He closes with a pledge that, no matter where they are, Cisco will not use litigation to stop employees from working elsewhere, and challenges HP to do the same:

Cisco’s promise to those looking to work in the networking industry is that no matter which of the fifty states you live in and work for Cisco, if you come to work for us we will apply California’s rule in favor of employee mobility nationwide. We know that employee retention is a matter of fair compensation and career opportunity, not litigation. And we challenge HP, with new leadership deeply steeped in Silicon Valley’s environment of mobility and opportunity, to step up and support employee freedom and stop suing employees just for leaving.

Reader Comments

This is what happens when corporations stop treating their employees like people, and more like property.

The very fact that personnel is now called "Human Resources" reflects this quite a bit. In many corporations, physical property like a computer is referred to as an "asset", but employees are a "resource"?

...When was the last time you saw a corporation have a company picnic?

Mystified Mike, doesn't actually know anything practical.

"There's no way to look at this and not wonder what is going on at HP. The company is flailing."

Simply put, corporations become senile, especially when rich for a long time. There should be a time limit on all corporations -- not least because otherwise immortal -- but mainly to break them up and create a ferment that lets new ideas in. I suggest 30 years tops. Then we'd be rid of HP, GM, Microsoft, Apple, and numerous other deep pools of stupidity. As is we're stuck with them forever. ... But when comes to anything that could actually upset corporations, Mike is QUITE a reactionary, so he won't embrace the notion of ANY limits.

Re: Mystified Mike, doesn't actually know anything practical.

I actually agree with the idea here, perhaps not the details, but as corporations are currently immortal "people" with extra-legal rights that citizens do not enjoy, I do feel that after a certain point--whether it's time or better: company size--corporations should be broken up to prevent stagnant monoliths from growing in our economy.

I don't really find your perceptions of Mike to be relevant to the idea you put forth though, seems like you're always QUITE reactionary to many things Mike says. :P

Re: Re: Mystified Mike, doesn't actually know anything practical.

There is an easy way to do it, attack all the monopoly laws that allow them to operate in that fashion and they will be no more.

Attack exclusive contracts and make them useless and other competitors will come in, attack IP laws and others will be allowed to enter.

Then it doesn't really matter who is on the top he will have to do a good job or face the consequences.

But that needs to be addressed at the legislation level first and to do that people need to create the forums that they will use to create the new laws needed for it to happen, so they know exactly what they should ask to anyone wanting to get a seat in congress.

Re: Re: oh Cisco the White Knight coming to save the day, BS

Nope. I just posted a few links farther down. It was about a competitor suing Cisco for monopolistic practices, and it just happened to be run by a former employee. But a quick scan of several of the reports doesn't actually show that they were beating up on him BECAUSE he was a former employee. They were just trying to protect a lock-in business strategy.

Re: Re: oh Cisco the White Knight coming to save the day, BS

Peter Alfred-Adekeye is not an innocent man himself. He didnt just leave Cisco, he left a company that hes been working formany year and found a loop hole where he knew he can make a quick buck. so what does he do? he leaves the company starts a new one and just sues the shit out of them. I dunno call me an idiot but i just dont think he is a good man himself. cisco didnt go after him for leaving and going to start his own company. they sued him cuz he used another mans info to get information about cisco.

For the record, however, while this is Cisco being asshats, this isn't an issue of employee relations. They're being asshats to a competitor who sued them, and they're trying to hold on to a lock-in business strategy.

Re: oh Cisco the White Knight coming to save the day, BS

Does anyone know this name?

Peter Alfred-Adekeye??

Ring any bells? This sorta is the pot calling the kettle black. Agreed what HP is doing is disgusting, but I don't think we should canonize Cisco yet.

An excellent point. And we called Cisco out for that. Though that wasn't an employment dispute, but a vindictive response to an antitrust case he filed. But, definitely a despicable situation. This post wasn't to canonize Cisco -- but this particular policy does make sense.

Re: Re: oh Cisco the White Knight coming to save the day, BS

Agree, Mike. It is irrelevant that Adekeye is a former Cisco employee. Cisco has no civil action pending against him. Mr. Adekeye is under federal indictment and subject to arrest because of his alleged theft of software from Cisco. If you wish to know more about the case, contact the Department of Justice which is seeking his arrest and return to the United States for trial.

Re: oh Cisco the White Knight coming to save the day, BS

Silliness of a money-based society again.

Without the artificial "we must make money!" boundaries, those people could be working cooperatively towards creating great new tech, and instead we now have corporations suing other corporations because they can't hoard their data and employees sufficiently jealously. Stupidity made manifest, much like the patent system, copyright and other advancement- and culture-retarding mechanisms...